Questions on monetary policy
Monetary policy
Short questions
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Why are official inflation targets not set at zero?
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Explain how changes in interest rates affect aggregate demand.
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What is the likely time lag between a change in interest rates and a change in the price level?
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Why is it generally considered beneficial for interest rates to be changed by a small amount at a time?
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What is the liquidity trap?
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What is Goodhart’s Law?
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Do changes in interest rates primarily affect the supply of money or the demand for money? Explain your answer.
